The process of mixing cryptocurrencies seems to be garnering quite a bit of bad press lately, and with the recent shutdown of Bit Blender, things are looking even harsher.
Removing Oneself from the Blockchain
To be fair, the company seems to have shut itself down after having issued a statement to all its customers asking them to withdraw their funds by May 30, though at press time, the reasons for its shutting itself down are not fully understood.
In the statement, the company presents a description of its services and where they can be found:
We are a hidden service that mixes your bitcoins to remove the link between you and your transactions. This adds an essential layer of anonymity to your online activity to protect against ‘Blockchain Analysis.’
The idea of mixing cryptocurrencies comes from not wanting your identity revealed on the blockchain network. Virtually every single crypto transaction, unless the asset being used in fully anonymous, is recorded onto some form of distributed ledger, which means that there’s always a record that auditors can refer to when checking out who paid what and when.
On one hand, it’s a good thing in that it prevents fraud, and malicious actors can be potentially be identified before they do any major damage to the system or before they run off with funds that aren’t theirs. On the other hand, privacy becomes a serious issue, though in reality, every time a credit card is used, a similar record is kept so that your transactions can be referred to in the future.
Sadly, not every customer could meet the funds withdrawal date set on the company’s website, which means their coins are likely lost. As one user stated in the Bitcoin Talk forum:
I recently came to know about the shutting down process of Bit Blender. I had many coins saved onto it. I, unfortunately, missed the withdrawal warning as I was away for the past few weeks. I am trying to access it for the last 2-3 hours, but I can’t succeed.
It’s possible that cryptocurrency mixing services have something of a negative reputation. Recently, European authorities shut down Best Mixer after it had been in business for less than a year. The company is facing allegations of money laundering and washing illicit funds clean.
This Looks Familiar…
One can’t help but wonder if maybe Bit Blender was engaged in similar activity and wanted to avoid the same fate. However, this has not been confirmed, and at this stage, all reasons are pure speculation.
Following the shutdown of both mixing services, Vitalik Buterin – the co-founder of the Ethereum network – announced that he was potentially looking into launching an ether-based mixing service of his own.